Market Settlement

Settlement of the prediction market occurs after the specified event end time has passed and the market question has been resolved by the specified resolver, chosen by the market creator.

• The market creator specifies the event end time when creating the market

• Settlement cannot occur until after this end time has passed

• The chosen resolver (e.g., UMA's Optimistic Oracle) is used to resolve the market question and determine the winning outcome

How Settlement is Resolved on UMA

The market settlement is resolved in a decentralized manner using UMA's Optimistic Oracle:

1. After the event end time, a price request is submitted to the Optimistic Oracle with the market question and additional metadata (ancillary data)

2. Anyone can propose a resolution by posting a bond. This begins the liveness period.

3. If the proposed resolution is not disputed within the liveness period, it is accepted as the final outcome

4. If the resolution is disputed, it gets escalated to UMA token holders for a vote via the Data Verification Mechanism (DVM)

5. The DVM vote determines the final market resolution

6. Once the final resolution is determined, the market contract allocates the collateral to the winning outcome:

   • If the settlement price is greater than or equal to the strike price, all collateral goes to the LONG side

   • If the settlement price is less than the strike price, all collateral goes to the SHORT side